Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/83398
Authors: 
Dinga, Marián
Dingová, Vilma
Year of Publication: 
2011
Series/Report no.: 
IES Working Paper 25/2011
Abstract: 
This paper studies the effect of the euro introduction on international FDI flows. Using country-pair data on 35 OECD economies during 1997-2008 and adopting the propensity score matching as identification strategy, we investigate the impact of the euro on capital reallocation. In general, the euro exhibits no significant impact on FDI. However, the effect becomes significant on the subset of EU countries, increasing FDI flows by 14.3 to 42.5 percent. Furthermore, we find that the EU membership fosters FDI flows much more than the euro, increasing FDI flows by 55 to 166 percent. Among other FDI determinants, high gross domestic product, low distance between countries and low unit labor costs in target country have a positive effect on FDI. On the contrary, long-term exchange rate volatility deters FDI flows.
Subjects: 
monetary union
foreign direct investment
common currency area
euro
JEL: 
E42
F15
F21
Document Type: 
Working Paper
Appears in Collections:

Files in This Item:
File
Size
299.99 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.